Carnegie-Rochester Conference Series on Public Policy最新文献

This paper introduces a new detailed dataset of high-frequency observations on inventory investment by a U.S. steel wholesaler. Our analysis of these data leads to six main conclusions: orders and sales are made infrequently; orders are more volatile than sales; order sizes vary considerably; there is substantial high-frequency variation in the firm's sales prices; inventory/sales ratios are unstable; and there are occasional stockouts. We model the firm generically as a durable commodity intermediary that engages in commodity price speculation. We demonstrate that the firm's inventory investment behavior at the product level is well-approximated by an optimal trading strategy from the solution to a nonlinear dynamic programming problem with two continuous state variables and one continuous control variable that is subject to frequently binding inequality constraints. We show that the optimal trading strategy is a generalized (S, s) rule. That is, whenever the firm's inventory level q falls below the order threshold s(p), the firm places an order of size S(p) − q in order to attain a target inventory level S(p) satisfying S(p) ≥ s(p), where p is the current spot price at which the firm can purchase unlimited amounts of the commodity after incurring a fixed order cost K. We show that the (S, s) bands are decreasing functions of p, capturing the basic intuition of commodity price speculation, namely, that it is optimal for the firm to hold higher inventories when the spot price is low than when it is high in order to profit from “buying low and selling high.” We simulate a calibrated version of this model and show that the simulated data exhibit the key features of inventory investment we observe in the data.

This paper evaluates a class of endogenous job destruction models based on how well they explain the observed experiences of displaced workers. We show that pure reallocation models in which relationship-specific productivity drifts downward over time are difficult to reconcile with the evidence on postdisplacement wages and displacement rates. Pure reallocation models with upward drift can explain the evidence, but implausibly large and persistent negative-productivity shocks are required to generate displacements. Combining upward drift with outside benefits or moral hazard as additional motives for displacement makes it possible to explain the evidence with much smaller shocks. Propagation of aggregate shocks, welfare implications of displacement, upgrade of relationships in lieu of displacement, and learning effects are also discussed.

One of the productive activities engaging the work force is reorganizing. When factors of production are better matched, productivity is higher. The probabilistic matching model of Diamond, Mortensen, and others provides a way to make the idea of reorganization precise. Because the flow of organizational effort generates benefits lasting well into the future, it is appropriate to think of organizational capital. Unemployment—job seeking—is one of the inputs to organization. The flow of organizational effort represented by unemployment is analogous to the flow of physical investment. When an adverse technology shock causes job destruction, the economy substitutes the formation of new organizational capital for the flow of output. An increase in the interest rate can cause intertemporal substitution toward lower job destruction and less reorganization, but this effect may not come into play for a brief unexpected increase, and may be overwhelmed by intertemporal substitution in physical capital.

The paper assesses the role of a Reserve Bank in the Federal Reserve System. It compares the Eurosystem with the Fed System, and offers suggestions for the Eurosystem based on the Fed's experience. A regional presence facilitates surveillance of the economy and helps a central bank to communicate with the public. Competition among regional banks stimulates innovative thinking on operational, research, and policy questions. The Chairman (President) of the system should be strong enough to encourage diverse views in the monetary policy committee and to build a consensus for decisive and timely policy actions as needed.

Skeptics have long believed that the EMU faces a dangerous period in Stage III when the “legacy” currencies will still be in circulation. The issue of whether the EMU could collapse arises from whether a country can extricate itself from the treaty. I will look briefly at some of the legal questions concerning a breakup of the union, specifically focusing on some costs that would materialize. This paper mainly will consider the technical mechanism whereby a crisis will be propagated through the financial system of the union, if a crisis does arise. The crisis may emerge as a straight banking crisis and not as an attack on the permanence of the EMU at all. It may reflect a disbelief in the permanence of the union; even if this belief is erroneous, it is worth examining how the funds will flow across borders and how the system will be defended. Finally, there may be a crisis that is preliminary to the collapse of the union itself. I include some earlier work on the propagation of a crisis in Stage III and examine issues of timing and dynamics of an attack.